s.365 - General protections

Application to deal with contraventions involving dismissal - application for costs - application dismissed.

• [1] On 9 January 2025 Mr Leo Kade (Applicant or Costs Respondent) made an application pursuant to section 365 of Fair Work Act 2009 alleging that ITG Payroll Pty Ltd (Respondent or Costs Applicant) contravened the general protections provisions of the Act by dismissing him (the general protections application).

• [2] The Respondent objected to the general protections application on the basis that the Applicant was an independent contractor and was not dismissed.

• [3] The general protections application was the subject of a conciliation conference on 3 March 2025. The Respondent's offer to settle the application made at that time involved the Applicant discontinuing the application and the Respondent providing a Statement of Service, in which case the Respondent would not seek an application for costs against the Applicant. The Applicant rejected this offer.

• [4] Directions were then issued which required the Respondent to file material regarding the jurisdictional objection by 18 March 2025, and the Applicant to file his material in reply by 8 April 2025.

• [5] The Respondent complied with the Directions however the Applicant did not. I note the Applicant was represented by lawyers, who subsequently sought an extension of time to file their material. I granted an extension and the Applicant's lawyers were advised that no further extensions would be granted.

• [6] On 16 April 2025, the Applicant's lawyers filed submissions but no evidence.

• [7] On 22 April 2025 I conducted a further conference, during which the Respondent made the same offer to settle the proceedings as was made on 3 March 2025. This offer was again rejected. The Respondent again advised the Applicant's lawyers that a costs application would be made if the application was not discontinued.

• [8] During this conference, I also advised the parties that given the Applicant was legally represented and extensions had already been granted to file evidence, no further evidence would be accepted.

• [9] The following day, the Applicant's lawyers sought to file evidence which I did not accept.

• [10] On 24 April 2025, the Applicant's lawyers sought to defer the hearing which was scheduled for the next business day. I declined the request to vacate the hearing.

• [11] At 4.55pm that same day, the Applicant's lawyers discontinued the proceedings.

• [12] The Respondent then filed this application seeking an order for costs pursuant to sections 611 and 357B of the Act. The legal fees incurred by the Respondent were $39,916 plus GST.

• [13] The general rule is that parties bear their own costs in relation to a matter before the Commission (s 611(1)). However, s 611(2) provides that the Commission may order a person to bear some or all of the costs of another person in relation to an application if the Commission is satisfied either that the first person made the application 'vexatiously or without reasonable cause' (s 611(2)(a)), or that 'it should have been reasonably apparent' to the person that the application had 'no reasonable prospect of success' (s 611(2)(b)). Even if this section is enlivened, the Commission retains a direction as to whether to award costs. The power to award costs should only be exercised with caution and only in a clear case.

• [14] Further, s375B provides that in relation to a general protection dismissal application the Commission may make a costs order against a party if it is satisfied that it 'caused' the other party to incur costs 'because of an unreasonable act or omission' in connection with the conduct or continuation of the matter.

• [15] A Full Bench in Church Eastern Health t/as Eastern Health Great Health and Wellbeing[1] stated the following regarding section 611(2)(a):

"[29] The question of whether an application was made 'vexatiously' looks to the motive of the applicant in making the application. It is an alternative ground to the ground that the application was made 'without reasonable cause' and may apply where there is a reasonable basis for making the application. In Nilsen v Loyal Orange Trust (Nilsen) North J observed that this context requires the concept of vexatiousness to be narrowly construed. His Honour went on to state that an application will be made vexatiously 'where the predominant purpose ... is to harass or embarrass the other party, or to gain a collateral advantage'. Deane and Gaudron JJ made a similar observation in Hamilton v Oades in which they said:

"The terms 'oppressive' and 'vexatious' are often used to signify those considerations which justify the exercise of the power to control proceedings to prevent injustice, those terms respectively conveying, in appropriate context, the meaning that the proceedings are 'seriously or unfairly burdensome, prejudicial or damaging' and 'productive of serious and unjustified trouble and harassment'."

[30] We now turn to the expression 'without reasonable cause'. A party cannot be said to have made an application 'without reasonable cause', within the meaning of s.611(2)(a), simply because his or her argument proves unsuccessful. The test is not whether the application might have been successful, but whether the application should not have been made. In Kanan v Australian Postal and Telecommunications Union., Wilcox J put it this way:

"It seems to me that one way of testing whether a proceeding is instituted 'without reasonable cause' is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being 'without reasonable cause'. But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause."[2]

• [16] The Full Bench in Baker v Salva Resources Pty Ltd[3] summarised the section 611(2)(b) exception as follows:

"[10] The concepts within s.611(2)(b) "should have been reasonably apparent" and "had no reasonable prospect of success" have been well traversed:

• "should have been reasonably apparent" must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test; and

• • a conclusion that an application "had no reasonable prospect of success" should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance as to be not reasonably arguable."[4]

• [17] Section 375B of the Act provides:

"s.375B Costs orders against parties

(1) The FWC may make an order for costs against a party (the first party) to a dispute for costs incurred by the other party to the dispute if:

(a) an application for the FWC to deal with the dispute has been made under section 365; and

(b) the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the dispute.

(2) The FWC may make an order under subsection (1) only if the other party to the dispute has applied for it in accordance with section 377.

(3) This section does not limit the FWC's power to order costs under section 611."

• [18] The Full Bench in Neil Keep v Performance Automobiles Pty Ltd[5] outlined the background of section 375B of the FW Act:

"[11] Section 375B was inserted into the FW Act by the Fair Work Amendment Act 2013 (Cth). The new provision came into effect on 1 January 2014 and applies to dismissals which took effect from that date.

[12] The Supplementary Explanatory Memorandum to the Fair Work Amendment Bill 2013 (Cth) states as follows:

"New section 375B allows the FWC to order costs against a party to a general protections dismissal dispute (the first party) if it is satisfied that the first party caused the other party to the dispute to incur costs by an unreasonable act or omission in connection with the conduct or continuation of the dispute. New section 375B is similar to the costs orders that are available against parties in relation to unfair dismissal matters (see section 400A).

57. This power to award costs is in relation to the dispute before the FWC and does not include costs associated with a general protections court application.

58. The power to award costs under new section 375B is not intended to prevent a party from robustly pursuing or defending a general protections dispute before the FWC. Rather, the power is intended to address the small proportion of litigants who pursue or defend disputes in an unreasonable manner. The power is only intended to apply where there is clear evidence of unreasonable conduct by the first party.

59. The FWC's power to award costs under subsection 375B(1) is discretionary and is only exercisable where the first party (whether the applicant or respondent) causes the other party to incur costs because of an unreasonable act or omission.

60. However, the power to award costs is only available if the FWC is satisfied that the act or omission by the first party was unreasonable. What is an unreasonable act or omission will depend on the particular circumstances but it is intended that the power only be exercised where there is clear evidence of unreasonable conduct by the first party.

61. New subsection 375B(2) provides that the power to award costs against one party in these circumstances is only exercisable if the other party to the dispute makes an application in accordance with section 377. New subsection 375B(3) makes it clear that the new power to award costs under subsection 375B(1) operates in addition to subsection 611(2), which enables the FWC to make costs orders against a person in certain circumstances, such as where an application is made vexatiously or without reasonable cause."[6]

• [19] The onus sits with the Costs Applicant to satisfy the Commission that the costs should be awarded.

• [20] There is no factual dispute as to the sequence of events set out above or the content of the offers made by the Costs Applicant in conciliation.

• [21] The Respondent contends that the general protections application had no reasonable prospects of success and was brought vexatiously. Further, the application was jurisdictionally barred because at no time was the Applicant an employee of the Respondent.

• [22] The Respondent also claimed that the general protections application was an abuse of process, and it had tried to avoid unnecessary legal costs by offering a resolution which was rejected by the Applicant on multiple occasions.

• [23] The Applicant submitted that the threshold for awarding costs had not been satisfied because the application was brought in good faith and it had a genuinely arguable position.

• [24] The Applicant also submitted that the discontinuance of the general protections application was procedurally driven and not reflective of the merits of the application. To this end he submitted that as a result of my procedural ruling to disallow late evidence, he was effectively precluded from presenting his full case. I reject this submission because the Applicant had a proper opportunity, including with additional time granted, to file his evidence but did not do so within the timeframe given.

• [25] The Applicant pointed to the High Court decisions in CFMMEU v Personnel Contracting Pty Ltd[7] and ZG Operations Australia Pty Ltd v Jamsek[8], which he submitted "significantly altered the legal landscape" regarding independent contractors. He also submitted material to demonstrate that there was a reasonable foundation for the claim that his relationship with the Respondent bore the hallmarks of employment rather than independent contracting.

• [26] Having considered the evidence and submissions, I am not satisfied that the general protections application was made vexatiously or without reasonable cause or that it was reasonably apparent that the application had no reasonable prospect of success. As the case law indicates, the test imposed is a high bar, that being "so obviously untenable that it cannot possibly succeed" or was "manifestly groundless". I am not satisfied that this threshold has been met. Nor am I satisfied that the evidence supports a finding that the general protections application was made for the predominant purpose of harassing or embarrassing the Respondent.

• [27] I accept that determining whether a relationship is one of employment or independent contracting is not always straightforward. If it were, litigation in this area would be non-existent, which is not the case.

• [28] Further, I am not satisfied that there is clear evidence of unreasonable conduct by the Applicant that would warrant an order for costs under s.375B.

• [29] Finally, if the general protections application was completely devoid of merit, as the Respondent contends, then there was little need for it to be legally represented, particularly in a jurisdiction where the default position is that parties represent themselves. As noted by Deputy President Colman in Delmont Hospital Unit Trust v Barbara Wielechowska:[9]

_"_A weak case does not ordinarily require the other party to obtain extensive legal advice and support."

• [30] The Commission retains a discretion as to whether to award costs. The power to award costs should be exercised with caution and only in a clear case. In all of the circumstances, I find that this is not a case where I should exercise my discretion to award costs. As such, this application is dismissed.

[1] Eastern Health t/as Eastern Health Great Health and Wellbeing [2014] FWCFB 810.

[3] Baker v Salva Resources Pty Ltd [2011] FWAFB 4014.

[5] Neil Keep v Performance Automobiles Pty Ltd [2015] FWCFB 1956.

[7] [2022] HCA 1.

[8] [2022] HCA 2.

[9] Delmont Hospital Unit Trust v Barbara Wielechowska [2025] FWC 498 at [13].

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